Illinois House committee OKs Madigan pension plan

Published: Wednesday, May 1, 2013 1:00 p.m. CST

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SPRINGFIELD (AP) — Union representatives threatened a lawsuit Wednesday over House Speaker Michael Madigan's pension-reform proposal to lower the retirement benefits of public employees in Illinois, but a committee advanced the plan anyway.

Madigan pledged a vote Thursday on the House floor after the Personnel and Pensions Committee approved it, 9-1.

The far-reaching proposal represents the Chicago Democrat's first direct involvement on a piece of legislation to tackle a $96.7 billion pension deficit, kicking the General Assembly's machinery into high gear. The bill addresses four of the five pension systems representing state employees, university professionals, primary-school teachers, and legislators.

"It will bring solvency and stability to the four systems," Madigan said, later explaining that the fifth account, covering judges, was left out as a "practical judgment." Reform advocates say judges are exempted because it will be the Supreme Court that ultimately decides the plan's constitutionality, a likelihood endorsed by half-a-dozen union leaders protesting the legislation.

"It will invite and get a legal challenge," said Mike Stout, business manager of ISEA-Laborers' Local 2002.

Unions have long contested legislators' attempts to get the pension mess under control, holding up a provision in the state constitution prohibiting the state from diminishing promised pension benefits. They point out that employees have for decades made required pension contributions out of their paychecks while the state notoriously shorted or even skipped pension payments.

Union official Henry Bayer said the plan appears to take care of the underfunding, but it shouldn't at the expense of employees.

"It's good that you're not kicking the can down the road," said Bayer, executive director of the 40,000-member American Federation of State, County and Municipal Employees. "It's bad that you're kicking our members in the butt."

Trying to catch up with the shortfall will force the state to pay $6 billion to pension counts alone in the coming fiscal year, nearly one-fifth of the total available in general revenue that must also go toward education, health and public safety.

"Illinois' economy will not fully recover until the General Assembly passes this comprehensive pension reform and sends the bill to my desk," Gov. Pat Quinn said in a prepared statement.

Madigan's plan calls for employees to pay 2 percent more of salary toward their retirement plans. Workers would only be able to collect pension on a salary up to $110,000, which would increase by 0.5 percent of the inflation rate per year.

Retirees would keep the 3 percent compounded annual cost-of-living increases received up to now, but future COLAs would be 3 percent of $1,000 per year of service, or $800 for someone receiving Social Security.

Madigan put his language into a bill that had arrived in the House from the Senate, where President John Cullerton, D-Chicago, designed it as limited test plan which included his proposed "consideration" — a choice between continued compounded COLAs or retiree health care. Giving participants a choice wards off constitutional questions, Cullerton believes.

But the Senate president's spokeswoman, Rikeesha Phelon, confirmed Madigan's statement that the language substitution was with Cullerton's consent. Cullerton will "continue to work on crafting a constitutional" plan, said Phelon, who did not go as far as Madigan in predicting Senate passage.

The potential for House victory was aided, however, by Republican Leader Tom Cross's signature as co-sponsor on the Madigan plan. Cross noted the Madigan bill's similarity to one Cross had earlier negotiated with Rep. Elaine Nekritz, D-Northbrook.

"It puts a lot of pressure on the Senate and creates some momentum, where you've got a bipartisan measure coming out of the House, for the Senate to act on it or some form of a very meaningful bill," Cross said in a statement released by his office.

The proposal omits any mention of a cost-shift of some downstate teacher-pension costs from the state to local school boards, a contentious prospect that suburban lawmakers fear would increase local property taxes. But Madigan promises he will address the matter in a separate bill later this month.

It does, however, include a unique, nine-page preamble that lays out in detail the fiscal crisis facing the state, including $9 billion in overdue bills, and steps lawmakers have taken to address them, including a 67 percent income-tax increase and cuts to Medicaid health care programs for the poor. Supporters hope it provides a bibliography of sorts to help Supreme Court justices see the necessity of the action.

"It would be used in the argument to the court and as happens in all major legislation, we're concerned about legislative intent," Madigan said, "and that's part of the intent."